- The Enterprise
- The Recorder
A $2 million payment to Charles County from a Silver Spring energy company looking to build a natural gas-fired power plant in Waldorf has reduced the funding gap in the county’s proposed fiscal 2015 budget to $10.2 million.
The payment in lieu of taxes agreement is between the county and Competitive Power Ventures, a Silver Spring company that has been trying to build a natural gas-fired electricity plant in Waldorf since 2007, county spokeswoman Donna Fuqua said.
State energy regulators green-lighted construction in April 2012, but the project and PILOT payment had been delayed by a subsequent lawsuit filed by the three utilities ordered to purchase energy from the plant.
The projected deficit had been estimated at $12.2 million.
Recurring, “sustainable” revenues such as property and income taxes are only expected to increase 1.8 percent in fiscal 2015, compared to a proposed 4.8 percent increase in operating expenses, “so that is why we have a $10 million deficit that we have to resolve somehow,” Dave Eicholtz, director of fiscal and administrative services, said Tuesday during the county commissioners’ weekly meeting.
“If you found $2 million in the last week, in five weeks we expect you to find enough money to balance the budget,” Commissioner Ken Robinson (D) said jokingly.
“We’ve had a good week, but I wouldn’t count on that every week,” Eicholtz said.
As he had in previous weeks, Robinson asked about the possibility of using unspent cable fund money to balance the operating budget.
The $5 million cable fund pays for the county’s public access Channel 95, as well as Internet and communications services, expenses that total about $2 million annually, Eicholtz said.
“So the $5 million is just sitting there?” Robinson asked.
“That’s correct. We’re not using that money right now,” Eicholtz said.
Robinson said the cable fund was the only partial solution he was willing to commit to immediately. Commissioners’ President Candice Quinn Kelly (D) and Commissioner Bobby Rucci (D) agreed.
Fiscal staff were hesitant to suggest the cable fund as a solution because it is a nonrecurring revenue source and, combined with the $2.3 million of Charles County Board of Education fund balance proposed to go toward the first-year operating costs of St. Charles High School, could leave the commissioners with a sizable budget gap to fill in fiscal 2016, Eicholtz said.
Eicholtz raised other options to increase revenue, including previous recommendations to increase the county’s property tax rate from $1.205 per $100 of assessed value to the constant yield rate of $1.221 and raise the recordation tax from $5 per $500 of assessed value to $6. The two proposals would generate $2.8 million and $2.2 million, respectively.
The constant yield tax rate equals that which would render the same amount of property tax revenue as the previous fiscal year. Due to decreasing assessments, the property tax would need to increase in order to maintain the same amount of revenue.
Eicholtz also presented two new revenue options — a property transfer tax of 0.5 percent that would raise $4.95 million and an income tax increase from 3.03 percent to the maximum of 3.2 percent, which would generate $3.1 million during the first six months of fiscal 2015.
In addition to the $2.3 million in school board fund balance and $5 million cable fund, the commissioners also could draw from $263,500 in reserves from the capital improvements program to help bridge the gap.
“That’s a lot of money, but when you’re looking at a $10 million deficit, that’s not going to solve it by itself,” Eicholtz said.
Potential budget cuts offered by fiscal staff include a reduction of the county’s contingency funding from $3.4 million down to $500,000, but Eicholtz warned that doing so could end up affecting the county’s reserves should it experience another harsh winter.
The contingency funds also could be critical to making up a potential property tax shortfall should the courts ever side with NRG Energy in its annual appeal of the state’s assessment of the NRG Morgantown Generating Station, the county’s largest taxpayer, County Administrator Mark Belton said.
Other possible cuts totaling nearly $1.3 million include $400,000 in debt savings due to a lower bond issue and wiping out $800,000 in grants to nonprofits, a proposal that has sparked fury among the county’s charitable organizations.
“We didn’t get a very good response from the board [that advises the commissioners on nonprofit donations] on that,” Eicholtz said.
Any additional budget cuts would require a reduction in program service levels, Eicholtz said.
Robinson said the county still could end up “pleasantly surprised” once final figures on 2014 income tax come in, and property tax assessments should start going up in step with the real estate market.
Though hopeful, Eicholtz cautioned against counting on any revenue increases. He expressed confidence in staff’s projection of an income tax shortfall and said that any increase in assessments would be phased in during a three-year period.
“It’s going to take a long time to catch up,” Eicholtz said.